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 Cablecast and web streaming of program in serieS

      "Conversations with Harold Hudson Channer"

            Upcoming Cable Television/Web Show: 

          For details of airing see bottom of page

               Guest For  FRIDAY APRIL 182008 

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                                                       GUEST:

                                                    (Originally Aired 01-17-00)

 

                          RODNEY  SHAKESPEARE

 

          

 

      The image “http://www.iaed.org/images/binary.gif” cannot be displayed, because it contains errors. The image “http://www.globaljusticemovement.net/images/RS+tulips%20.jpg” cannot be displayed, because it contains errors. The image “http://www.iaed.org/images/binary.gif” cannot be displayed, because it contains errors.

                         SCHOLAR / TUTOR

                             CO-AUTHOR

                   (with ROBERT ASHFORD):

            

"BINARY ECONOMICS - THE NEW PARADIGM"    

   Christian Council for Monetary Justice - UK

                      London Global Table

 
                   Global Justice Movement

                       www.globaljusticemovement.net

                 rodney.shakespeare1@btopenworld.com

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  The program can be viewed in its entirety by clicking the you tube link below:

        Rodney Shakespeare - 01-17-00 - RODNEY SHAKESPEARE

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More about: RODNEY SHAKESPEARE & BINARY ECONOMICS

Rodney Shakespeare

Rodney Shakespeare. Rodney is a tutor and binary economist (Binary Economics - the new paradigm, Robert Ashford & Rodney Shakespeare). He lives in London (UK) and, with Canon Peter Challen, is near to completing a new book entitled Seven Steps to Justice, making a global response to the events of 11th September, 2001 and, in particular, the causes of those events. The book also aims to unite all individuals and groups who understand monetary reform. Email: rodney.shakespeare1@btopenworld.com --

Rodney Shakespeare is a UK tutor, binary economist and Visiting Professor at Trisakti University, Jakarta, Indonesia. A Cambridge MA and Barrister of the Middle Temple, he is co-author of three books the new paradigm; and Seven Steps toincluding Binary Economics Justice; and he wrote the Foreword for The Islamic World-System. Rodney Shakespeare has presented major papers at Islamic conferences regarding the connection between the money supply and the real economy. Notable among them were the conferences held at The International Islamic University, Kuala Lumpur (August, 2002); The Trisakti University, Jakarta (January, 2004); and The International Islamic University, Chittagong (December, 2004). Rodney Shakespeare is not a Muslim. However, he believes that because Islam is opposed to riba (interest), it can, and must, find a new, distinctive way forward to give an intellectual, material and moral lead to the rest of the world. Rodney Shakespeare represents the Christian Council for Monetary Justice and the London Global Table.

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Rodney Shakespeare is a UK tutor, binary economist and Visiting Professor at Trisakti University, Jakarta, Indonesia.  A Cambridge MA and Barrister of the Middle Temple, he is co-author of three books including Binary Economics  the new paradigm; and Seven Steps to Justice; and he wrote the Foreword for The Islamic World-System. Rodney Shakespeare has presented major papers at Islamic conferences regarding the connection between the money supply and the real economy. Notable among them were the conferences held at The International Islamic University, Kuala Lumpur (August, 2002); The Trisakti University, Jakarta (January, 2004); and The International Islamic University, Chittagong (December, 2004).  Rodney Shakespeare is not a Muslim.  However, he believes that because Islam is opposed to riba (interest), it can, and must, find a new, distinctive way forward to give an intellectual, material and moral lead to the rest of the world. Rodney Shakespeare represents the Christian Council for Monetary Justice and the London Global Table.

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Introduction

Binary economics is the expression of a new universal paradigm or new understanding of reality that creates a new economics, a new politics, a new justice and a new morality.[1] Without the new universal paradigm there will be no peace nor an end to colonialism and racism.

The Modern Universal Paradigm - cover————————————————————
IS THE GLOBAL FINANCIAL CRASH HAPPENING? WHAT IS THE ANSWER?
The Modern Universal Paradigm by Rodney Shakespeare (Foreword by Tarek el-Diwany), containing the latest developments, is now published. To purchase, click PRESS HERE TO BUY on the top left of this page.
————————————————————

In its economics aspect, binary economics is a market economics whose markets work for everybody. Furthermore, it upholds private property but private property (and the associated income) for everybody.[2] A summary might be – a justice which creates efficiency and an efficiency which creates justice.[3]

An alternative summary is – the use of national bank-issued interest-free loans, administered by the banking system, for the development and spreading of various forms of productive (and the associated consuming) capacity thereby creating a balance of supply and demand (as required by Say’s Theorem) and forwarding social and economic justice.

A quick illustration of binary economics

Philadelphia Waterworks and Museum. Source: Jeannine Keefer

A quick illustration of binary economics is the interest-free funding for a waterworks, bridge, sewage works, road or hospital - the use of national bank-issued interest-free loans halves, even quarters, the cost.

Two more illustrations are:-
• a halving or more of the usual cost of micro-credit for poor people
• the enabling of any individual in the population (from a baby to a retiree) to become a shareholder in one of the great corporations — the shares would be full-payout ones thereby creating a considerable income for the holder. NB The financial savings of individuals are not used as the source for funding the full-payout shares - the source of the financing is ultimately the national bank.

The national bank is used as the source of the loans for the shares to emphasise that the national money supply is not that of a mere private grouping (as is the case today) but is society’s money supply which (although funnelled through the banking system making an administrative charge) can be interest-free for the purposes of an efficient, just economy. Indeed, where the financing of new productive capacity is concerned, interest is not necessary.

Meaning of ‘binary’

The ‘binary’ (in ‘binary economics’) sometimes perplexes people. It means ‘composed of two’ because it suffices to view the factors in production as being but two (labor and capital) and thus there are only two ways of genuinely earning a living − by labor and/or by the ownership of productive capital. In viewing the two factors it can also be observed that humans own their own labor but they do not necessarily own the other factor – capital.

NB ‘Capital’ means things which create wealth e.g. seeds, hand tools, machines, patents, raw materials, ships, quarries, bio-technological processes, telephone networks, farm animals, trucks etc.

Binary economics is fundamentally different from all forms of conventional economics

Binary economics is fundamentally different from all forms of conventional economics (be they expressions of right-wing, centrist or left-wing theory).[4] Thus, unlike most mainstream economics, binary economics accommodates belief in God, unicity and ethics.[5] It directly addresses the main environmental issues; does not assume that humans only follow their own immediate short term self interest; ends economic colonialism; appeals to people of faith and of good faith;[6] and does not assume that humans (as distinguished from capital instruments) do all, or nearly all, of the physical creation of wealth.[7] Binary economics is not a “third way” between capitalism and socialism: it expresses a new paradigm.

In the 50-minute video below (2000) Harold Hudson Channer of Manhattan Neighbourhood Network tv discusses binary economics with Rodney Shakespeare, co-author of Binary Economics - the New Paradigm and Dr. Edward Wolff, the American expert on the distribution of wealth and author of Top Heavy.

NB Binary economics is a developing subject. The video is highly topical but, all the time, binary economics develops (see Developments on the Present page; the Global Crisis and Solution page; and the False Assumptions page).

As a study, binary economics is not reductionist,[8] does not ignore the imbalance in power relationships between people,[9] and does not assume that extensive poverty is inevitable. (NB. 55% of the world’s population lives on under $3 per day: every day an estimated 25,000 people die from the effects of dirty water).[10] Being concerned with social justice and economic justice it also notes that allegedly successful ‘free market’ economies show symptoms of profound failure – thus figures from the 2004 Census show that one fifth of Americans live on under $7 per day.[11] Moreover, up to one fifth of the USA population does not have health security – and this happens in a country which is the richest in the world; which claims to be the embodiment of a perfect, efficient and just ‘free market’; and which spends 18% of its income on health. Twenty eight million Americans have to rely on food stamps (April, 2008).

Binary economics addresses weaknesses in current economic system

Furthermore, binary economics addresses a number of weaknesses in the current economic system which are dismissed by conventional economics as being of no, or low, importance. The weaknesses include:–
• Almost all of the modern money supply is in the form of interest-bearing debt created and owned by the banking system (in the UK over 95% of the money supply is created in this way: there are similar percentages in other countries)[12]
• The money supply is generally not directed at productive capacity but instead goes into derivatives, rising asset prices and consumer credit. [13]
• Forms of productive capital remain narrowly owned and there is no policy to spread the ownership of productive capacity (and the associated consuming capacity)throughout the population[14]
• People do not have their own independent incomes
• In practice, economic colonialism
• In practice, racism

Binary economics redresses those weaknesses. Economic colonialism is ended by allowing countries to have control over their own money supply, control over their own assets, and by freeing them from international debt. Opposition to racism has little meaning unless it is manifested in practical, everyday material improvement thus, in particular, the binary spreading of ownership enables the spreading of the associated incomes.

The binary competence

Indeed, over time, on market principles, binary economics enables all individuals to obtain an independent income or binary competence. The competence (the word can be traced back to Jane Austen, Alexander Pope and William Shakespeare meaning property or means sufficient for the necessaries and conveniences of life; sufficiency without excess) is defined as:-

a capital estate large enough to supply sufficient current consumer income to support at least one half of an affluent life style (measured in the context of what society as a whole can efficiently produce).

Figures contained in a 1998 study by Northeast Ohio Employee Ownership Center, Kent State University, Ohio and a 2005 study from the Center for Economic and Social Justice, Washington, D.C., indicate (2005 figures) that, aged sixty five, an adult would have a binary income of about $26,000 and a capital accumulation of at least $200,000 with both figures continuing to increase after the age of sixty five.[15]

Along with the competence, of course, individuals will also be free to gain income from their labour as now.

As part of binary policy to develop capital ownership for each member of the population there is no estate duty (or Inheritance Tax) on death IF the estate devolves in such a way as to spread capital estates, and therefore capital ownership, to more individuals. If it does not do so, then there is a graduated tax.

Other characteristics of binary economics

Binary economics is of particular importance in a world where, increasingly, more of the physical contribution to production is being, and will be, done by machines and near-robots.[16] With binary economics national debt is lessened and national unity encouraged. Binary economics creates a stable economy and associated financial system which is not subject to unsustainable booms and resulting crashes.

In binary economics there is no expropriation (as there can be in socialism, for example). Moreover, because people come to have sufficient income from their own independent capital estates much less redistribution is necessary (for example, by taxes in order to fund forms of government spending including welfare benefits). Because there is much less redistribution there is much less taxation.

Binary economics cannot be inflationary: it is counter-inflationary. Nor can it lead to a global financial crisis of the sort now threatening economies and markets. It upholds the periodic political vote but also ensures that all individuals have the everyday freedom stemming from an independent economic base thereby deepening democracy.[17]

In its intent to involve people in ownership and participation binary economics has affinity with Distributism and with the worker cooperatives of the Emilia-Romagna region of Italy and the Mondragón Cooperative Corporation of Spain.

Conventional economics compared with binary economics

A good understanding of binary economics can be obtained by contrasting various aspects with comparable aspects in conventional economics (especially mainstream neoclassical economics). The first contrast is that mainstream neoclassical economics claims to be primarily a positive economics (i.e., an analysis of ‘what is’) whereas binary economics is considered (by mainstream neoclassical economists) to be primarily a normative economics (proposing an economic system that ‘ought to be’). However, as compared to mainstream neoclassical economics, binary economics undoubtedly has a superior account of physical reality (i.e., of what is) — particularly in its analysis called productiveness. Binary economics is therefore both a highly positive economics and a highly normative one.

Secondly, in its physical analysis of who or what creates the wealth mainstream neoclassical economics upholds the concept of productivity (generally labour productivity) while, in complete contrast, binary economics has the new concept of productiveness giving fair credit to the contributions of both labour and capital. Binary economics believes that the binary productiveness analysis, as an understanding of physical reality, is far superior to that of mainstream neoclassical productivity.

Then conventional mainstream neoclassical economics believes that interest (as opposed to administration cost) is always necessary. However, binary economics, again in complete contrast, states that, certainly where the development and spreading of productive (and the associated consuming) capacity is concerned, interest (as opposed to administration cost) is not necessary.

For newly-created money, conventional economics upholds the doctrine of the time value of money whereas binary economics, noticing that money is created out of nothing by the banking system, denies the time value doctrine. Consequently, binary economics rejects conventional financial savings doctrine (that there must be financial savings prior to investment) - no financial saving is necessary if money can be created out of nothing. Indeed, what matters is whether the newly-created money is interest-free, whether it can be repaid, whether there is effective collateral and whether it goes towards the development and spreading of various forms of productive (and the associated consuming) capacity.

Furthermore, an assumption of general scarcity is at the heart of conventional economics. Binary economics, however, denies the assumption. As Amartya Sen showed starvation is primarily due to lack of money in the hands of the starving and not the general absence of food: thus it is human attitudes, practice and institutions which are at fault.

The contrast continues. Thus conventional economics:-
• is largely unconcerned that the present money supply (mostly created by fractional-reserve banking) is generally not directed at productive capacity
• in practice engenders a continual inflation
• conceives of a self-centred homo economicus
• eschews ethics and belief in God
• ignores the imbalance in power relationships between people.

But binary economics views it as essential that:-
• the money supply be directed at the development and spreading of productive (and the associated consuming) capacity
• the money supply be not inflationary, indeed, should be counter-inflationary
• recognition be made that humans are capable of going beyond self-interest
• ethics and belief in God be upheld
• account be taken of the imbalance in power relationships between people.

Very fundamentally, binary economics rejects the claim of conventional economics that it promotes a ‘free market’ which is free, fair and efficient. Binary economics states that the present ‘free market’ is unfree, unfair and inefficient not least because the ‘free market’ thinks it does not matter who owns productive capital and how it is distributed and does not worry if people do not have independent incomes.

In a quite remarkable way the two economics differ on the subject of democracy. Conventional economics upholds the periodic political vote (as in, for example, elections to government). Binary economics does the same but then deepens democracy by insisting that productive capital and the practical everyday power its ownership gives to individuals be widely distributed as well. In binary economics freedom is only truly achieved if all individuals are able to acquire an independent economic base. In short, binary economics upholds political democracy plus economic democracy.

Perhaps most importantly of all, conventional economics is generally heedless of (or at least, not directly involved with) environmental issues but, even if it does heed them, does not have the specific mechanisms to address the environment in a large-scale way. Indeed, conventional economics generally views environmental solutions as imposing an economic cost, and a large one at that. Binary economics, however, again in complete contrast, does have the mechanisms - particularly, interest-free loans - and its solutions do not impose economic cost.

Lastly, conventional economics claims that its mathematical equilibriums are a manifestation of a world-encompassing objective science expressing universal values. But binary economics denies that claim.

Brief summary

A brief summary is that binary economics results in
• capital ownership for all individuals in the population so that they produce (and thus earn) independently of whether or not they also have a conventional job
• free markets
• an efficient wealth creation including a balancing of supply and demand
• structural economic and social justice
• no inflation
• proper encouragement of small and start-up businesses
• sharing and participatory structures
• a strong ethical sense imbuing everything
• an end to riba/interest
• an end to economic colonialism
• public and environmental capital projects
• a direct connection between money and the real economy
There is also:─
• an increase in political freedoms and a deepening of democracy
• policy to unite inhabitants who have different linguistic, religious, geographical and ethnic backgrounds
In particular, over time, central bank-issued interest-free loans free a government from increasing National Debt and enable the ownership of an economy to remain in local hands.

Binary economics is beginning to be taught in universities. The first such teaching is on the Islamic Economics and Finance postgraduate program at Trisakti University, Jakarta, Indonesia - Trisakti postgraduate Islamic Economics & Finance. Trisakti is famous as the birthplace of the 1998 Indonesian reformasi revolution. It is the biggest private university in Indonesia and second only to the main state university in prestige.


Courtesy Trisakti University, Jakarta, Indonesia



A Visual Summary of the Main Binary Mechanisms and Solution to the Global Financial and Environmental Crisis
 


New Monetary Reform Diagram
 


Economics Words
 

Footnotes

1. Robert Ashford & Rodney Shakespeare (1999) Binary Economics - the new paradigm.
2. Norman Kurland, Dawn Brohawn & Michael Greaney (2004) Capital Homesteading for Every Citizen: A Just Free Market Solution for Saving Social Security.
3. Robert Ashford & Rodney Shakespeare (1999) op. cit.
John H. Miller ed. (1994) Curing World Poverty: the New Role of Property.
There are five Justices at www.globaljusticemovement.net
4. Robert Ashford (1990) The Binary Economics of Louis Kelso: the Promise of Universal Capitalism (Rutgers Law Journal, vol. 22 No.1. Fall, 1990).
5. Rodney Shakespeare (2007) The Modern Universal Paradigm.
6. Rodney Shakespeare, (2007) op. cit.
7. Robert Ashford (1990) op. cit.
Robert Ashford & Rodney Shakespeare (1999) op. cit.
8. Rodney Shakespeare, (2007) op. cit.
9. Rodney Shakespeare, (2007) op. cit.
10. “Over a fifth of the world’s population still live in abject poverty (under $1 a day), and about one-half live below the barely more generous standard of $2 a day.” Technical Report of the High-level Panel on Financing for Development (United Nations, Dec., 2000).
11. William Shanley Poverty in America: American Dream Now a Nightmare for Millions? One in Five Lives on Less than $7 per day Global Research, April 23, 2007 www.globalresearch.ca
12. Rodney Shakespeare & Peter Challen (2002) Seven Steps to Justice.
13. Rodney Shakespeare (2007) op. cit.
14. Norman Kurland, Dawn Brohawn & Michael Greaney (2004) op. cit.
15. Rodney Shakespeare (2007) op. cit.
16. James S. Albus (1976) Peoples’ Capitalism -The Economics of The Robot Revolution.
17. Louis Kelso & Patricia Hetter Kelso (1986 & 1991) Democracy and Economic Power - Extending the ESOP Revolution through Binary Economics.

 
 
 

 

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Binary economics

From Wikipedia, the free encyclopedia

 

Binary economics is a heterodox theory of economics that endorses both private property and a free market but proposes significant reforms to the banking system. The aim of binary economics is to ensure that all individuals receive income from their own independent capital estate[1], using interest-free loans issued by a central bank to promote the spread of employee-owned firms.[2] These loans are intended to: halve infrastructure improvement costs, reduce business startup costs, and widen stock ownership.

Binary economics is a minority discipline, hard to place on the left-right spectrum[3]. It has variously been characterized as an extreme right-wing ideology and as extremely left-wing by its critics[4][5]. The ‘binary’ (in ‘binary economics’) means ‘composed of two’ because it suffices to view the physical factors of production as being but two (labour and capital which includes land) and only two ways of genuinely earning a living − by labour and by productive capital ownership. Humans are usually considered as owning their labour, but not necessarily the other productive factor – capital.[6]

Binary economics is partly based on belief that society has an absolute duty to ensure that all humans have good health, housing, education and an independent income, as well as a responsibility to protect the environment for its own sake. The interest-free loans proposed by binary economics are compatible with the traditional opposition of the Abrahamic religions to usury.[7]

Proponents[8] of binary economics claim that their system contains no expropriation of wealth, and much less redistribution will be necessary. They argue that it cannot cause inflation and is of particular importance as more of the physical contribution to production is automated.[9] and that the Binary economics paradigm[10] is particularly helpful in addressing the issue of why developing countries languish.[11] Advocates[12] contend that implementing their system will lessen national debt and encourage national unity. They believe binary economics could create a stable economy.

In its intent to involve people in ownership and participation binary economics has affinity with distributism and with the worker cooperatives of the Emilia-Romagna region of Italy and the Mondragón Cooperative Corporation of Spain.

Contents

[hide]

[edit] Background

Although elements of binary economics can be found elsewhere (for example, in Pope Leo XIII Rerum Novarum 1891; Harold Moulton (1935) The Formation of Capital; the distributism of G. K. Chesterton and Hilaire Belloc; and Ibn Ashur (1946) Maqasid al Shari’ah al Islamiya) the first clear formulation of the subject was by American lawyer Louis Kelso and Mortimer Adler (the Aristotelian philosopher and educator) in their book The Capitalist Manifesto (1958). The title of the book is best viewed as a thing of its time, being a Cold War reference in opposition to communism.

Kelso and Adler continued to write together - The New Capitalists (1961) contributes greatly to the understanding of collateral and capital credit insurance - and then Kelso teamed up with political scientist Patricia Hetter Kelso to explain how capital instruments provide an increasing percentage of the wealth and why capital is narrowly owned in the modern industrial economy.[13] Their analysis predicts that widely distributed capital ownership will create a more balanced economy. This is at the heart of the binary claim to create an efficiency which creates justice and vice versa.

Kelso and Hetter then proposed new binary share holdings which (with exception for research, maintenance and depreciation) would pay out their full capital earnings, be capable of being insured and, if loss occurred, would occasion no recourse to the new binary owners. Because of the full payout provision they argued that binary holdings would yield more than five times what is typically paid out today. In the binary economics plan, this improved payout would allow a new widespread capital ownership, and achieve individual incomes which could be possessed by anybody.

[edit] Employee Share Ownership Plans (ESOPs) and other plans

Very often the first acquaintance people have with binary economics comes through today’s Employee Share Ownership Plans (ESOPs).[14] These stem originally from Louis Kelso & Patricia Hetter Kelso (1967)Two-Factor Theory: The Economics of Reality; the founding of Kelso & Company in 1970; and then from conversations in the early 1970s between Louis Kelso, Norman Kurland (Center for Economic and Social Justice), Senator Russell Long of Louisiana (Chairman, USA Senate Finance Committee, 1966 - 1981) and Senator Mike Gravel of Alaska. There are about 11,500 ESOPs in the USA today covering 11 million employees in closely held companies. As Binary Economics predicts, some studies have shown productivity improvements as an effect of employee ownership[15] and involvement - binary techniques for this are called Justice Based Management.

[edit] Conventional economics compared with binary economics - areas of conflict, criticism and contrast

A good understanding of binary economics can be obtained by contrasting various aspects with comparable aspects in conventional economics (especially mainstream Neoclassical economics). The first contrast is that mainstream academic economics is primarily 'positive economics' (the analysis of 'what is') where binary economics proposes an economic system that ‘ought to be’ ('normative economics'). However, binary productiveness analysis is claimed to be a superior account of reality (‘what is’) than classical positive economics.

Conventional economics upholds productivity[16] which is not a direct analysis of physical reality: rather it is the calculation of a ratio or rate of total output divided by unit of input (though usually having separate labour & capital goods input-components, e.g Cobb-Douglas). In contrast, the binary analysis of productiveness (see section below) attempts to give accurate credit to the physical contributions of both labour and capital goods to production, attempting to answer a fundamental economic question - Who or what physically creates the wealth?

The third contrast is that conventional economics believes that interest (as distinct from administration cost) is always necessary; in Binary Economics theory it isn't (certainly where the development and spreading of productive capacity is concerned).[17]

For newly-created money, conventional economics upholds the doctrine of the time value of money whereas binary economics doesn't apply the principle to fiat money.

An assumption of general scarcity is at the heart of conventional economics. Binary economics, however, denies the assumption. Amartya Sen argued that starvation is primarily due to lack of money in the hands of the starving and not the absence of food: thus it is human attitudes, practice and institutions which are at fault.

Binary economics also rejects conventional financial savings doctrine (that there must be financial savings prior to investment) - no financial saving is necessary if money can be created out of nothing.[18] The theory asserts that what matters is whether the newly-created money is interest-free, whether it can be repaid, whether there is effective collateral and whether it goes towards the development and spreading of various forms of productive (and the associated consuming) capacity.

The contrast continues: Unlike Binary economics, conventional economics is largely unconcerned that the present money supply is generally not directed at the spreading of productive capacity -- broadly, productive capital is narrowly owned[19].

Very fundamentally, binary economics rejects the claim of conventional economics that it promotes a ‘free market’ which is free, fair and efficient. (e.g., as an interpretation of the classical First Fundamental Theorem of Welfare Economics).

The two economics differ on the subject of democracy. Conventional economics upholds the periodic political vote. Binary economics does the same but then deepens democracy[20] by insisting that productive capital and the practical everyday power its ownership gives to individuals be widely distributed as well. In binary economics freedom is only truly achieved if all individuals are able to acquire an independent economic base.

On environmental issues, binary economics claims to have a big advantage over conventional economics because of the interest-free loans which would be available. (See Environment section below.) The appropriate (non-zero) interest rate dominates conventional economic analysis of environment policy (e.g. in tackling climate change).

[edit] Uses of central bank-issued interest-free loans

Binary economics proposes that central bank-issued interest-free loans should be administered by the banking system for the development and spreading of productive (and the associated consuming) capacity, particularly new capacity, as well as for environmental and public capital. While no interest would be charged, there would be an administrative cost as well as collateralization or capital credit insurance.[21]

Binary economics is concerned that the banking system 'creates new money out of nothing' by issuing more credit than it has reserves.[22] The supply of interest-free loans takes place in circumstances of a move (over time) towards banks maintaining reserves equal to 100% of their deposits. Thus banks would be confined to lending depositors’ money (and the bank’s own capital) & administering the interest-free loans. Some binary economists propose that under binary principles, the International Monetary Fund and its Special Drawing Rights could allow everyone in the world capital ownership.

Not all investments would qualify for the interest-free loans; the development and spreading of new productive capacity would be targeted. For example, the loans would not be available to home buyers, since this would accelerate asset inflation.

[edit] Investments eligible for interest-free loans

[edit] Public capital investment

Interest-free loans would allow hospitals, sewage works, social housing, roads, bridges etc. to be built at half or less of the present cost. (This use is also advocated by the USA Sovereignty movement - Dennis Kucinich, Ken Bohnsack et al.). However, the capital projects can still, if wished, be built, managed, even owned, by the private sector and use made of Community Investment Corporations and the like. In these Corporations local citizens own the local land and get the rents from it.[23]

Interest-free loans for public capital have been successfully used in Canada, New Zealand and Guernsey. Malaysia is today believed to be experimenting with them.[24]

After 1949 central bank loans were a major factor in the Taiwanese Land to the Tiller program which spread land ownership from the few to the many. This was done without causing inflation and was an overall binary solution because, in various ways the money went into the spreading of both productive and consuming capacity.[25] (One way was by financing the buyout with industrial bonds, thus giving capital to small industries to provide things for the newly empowered farmers to purchase.)

[edit] Private capital investment

Ownership of productive (and the associated consuming) capacity, particularly new capacity, can be spread by the use of central bank-issued interest-free loans.[26] Interest-free loans should be allowed for private capital investment IF such investment creates new owners of capital and is part of national policy to enable all individuals, over time, on market principles, to become owners of substantial amounts of productive, income-producing capital.[27] By using central bank-issued interest-free loans, a large corporation would get cheap money as long as new binary shareholders are created.

It is proposed that all large corporations should have to pay out all their earnings all the time (with exception of reserves for maintenance, depreciation, repair and research). Large corporations will then have the option of obtaining interest-free loans on condition that they help to spread ownership. Medium-sized corporations (which would not be subject to the full pay out provision) will be able to have interest-free loans if they spread ownership.

 

[edit] 'Green' environmental capital investment

Interest-free loans should be used, in particular, for clean, renewable energy. At present, a lot of green power-generating projects are not financially viable, but they would be with interest-free loans. Much more clean electricity could then be provided (e.g. by tidal barrages, wave machines, wind turbines, solar electricity, and geothermal power stations).

There are many 'alternative' technologies - at present viewed with varying degrees of skepticism by mainstream science - that, in principle, would be eligible for research and development funding under binary economics. Some of these technologies, if physically possible, would enable the clean generation of electricity for cars, houses, trains and factories and they can be found among the Top 100 Technologies which are a mixture of that which lies within, on the edge of, and outside existing science e.g., Blacklight Power (Randell Mills); and Steorn.

[edit] Small and start-up businesses including microfinance

Interest-free loans should be used for micro-finance, small business and farms thereby freeing them from the huge pressure of compounding interest-bearing debt. Farm capital can be one half or less of the usual cost. The world’s poor people (e.g., Bangladesh women[28] - 55% of the world's population live on under $3 per day) could be enabled to halve or more the cost of building small businesses by the use of interest-free micro-finance being funnelled through the Grameen Bank and similar institutions such as the Institute for Integrated Rural Development.

[edit] Loans to students

It is binary policy that, since further and higher education should be encouraged, student loans should not bear interest.[citation needed]

[edit] Productiveness

Binary productiveness and conventional productivity are distinct concepts.[29]

Conventional productivity, generally labour productivity, is the ratio of labor as input to the overall output.[30]

In contrast, binary productiveness is the percentage of total physical input that labor and capital each contributes to the output.[31] Capital contributes an increasing physical percentage as even Marx understood.[32] Consider the example of a man digging a hole. Using his hands this takes him four hours. But, by using a form of capital − a shovel − he can dig the hole in one hour or dig four holes in the same amount of time it took him to dig one hole with his hands. The physical productiveness of the human labor is 25% while the physical productiveness of the capital shovel is 75%.

A criticism of the hole and shovel example has been made by Timothy D. Terrell[33] summarizing a critique given by Timothy Roth.[34] The criticism states that: a) somebody invented the shovel; b) the shovel cannot be independent. Roth argues that someone with human capital had to invent the shovel before it could be used, so the presence of the shovel is not independent of human capital. Also, Roth notes the presumption that the human hole digger has no role in the productiveness of the shovel.

However, binary economics states that the fact that somebody invented the shovel has nothing to do with its present use for digging a hole and the shovel is viewed as an independent contributor which co-operates with the man just as the man co-operates with the shovel. Moreover, just as two humans can co-operate, so the man and the shovel co-operate to dig the hole and produce far more holes than either the man or shovel could do by themselves.

[edit] Estate duty

As part of binary policy to develop capital ownership for each member of the population, there is no estate duty (or Inheritance tax) on death if the estate devolves in such a way as to spread capital estates to more individuals. If it does not do so, binary economics proposes a graduated tax.

[edit] External links

[edit] Texts

  • Albus, James S.(1976) Peoples’ Capitalism - The Economics of The Robot Revolution.
  • Ashford, Robert & Shakespeare, Rodney (1999) Binary Economics - the new paradigm.
  • Ashford, Robert Louis Kelso’s Binary Economy (The Journal of Socio-Economics, vol. 25, 1996).
  • el-Diwany, Tarek (2003) The Problem With Interest.
  • Gates, Jeff (1999) The Ownership Solution.
  • Gates, Jeff (2000) Democracy At Risk.
  • Gauche, Jerry Binary Modes for the Privatization of Public Assets (The Journal of Socio-Economics. Vol. 27, 1998).
  • Greenfield, Sidney M. Making Another World Possible: the Torah, Louis Kelso and the Problem of Poverty (paper given at conference, Colombia University, May, 2006).
  • Kelso, Louis & Kelso, Patricia Hetter (1986 & 1991), Democracy and Economic Power - Extending the ESOP Revolution through Binary Economics.
  • Kelso, Louis & Adler, Mortimer (1958), The Capitalist Manifesto.
  • Kelso, Louis & Adler, Mortimer (1961), The New Capitalists.
  • Kelso, Louis & Hetter, Patricia (1967), Two-Factor Theory: the Economics of Reality.
  • Kurland, Norman A New Look at Prices and Money: The Kelsonian Binary Model for Achieving Rapid Growth Without Inflation.
  • Kurland, Norman; Brohawn, Dawn & Michael Greaney (2004) Capital Homesteading for Every Citizen: A Just Free Market Solution for Saving Social Security.
  • Miller, J.H. ed., (1994), Curing World Poverty: The New Role of Property.
  • Reiners, Mark Douglas, The Binary Alternative and Future of Capitalism.
  • Schmid, A. Allan,(1984), “Broadening Capital Ownership: The Credit System as a Focus of Power," in Gar Alperovitz and Roger Skurski,eds. American Economic Policy, University of Notre Dame Press.
  • Shakespeare, Rodney & Challen, Peter (2002) Seven Steps to Justice.
  • Shakespeare, Rodney (2007) The Modern Universal Paradigm.
  • Turnbull, Shann (2001) The Use of Central Banks to Spread Ownership.
  • Turnbull, Shann (1975/2000), Democratising the Wealth of Nations.

[edit] References

  1. ^ Robert Ashford & Rodney Shakespeare (1999) Binary Economics – the new paradigm
  2. ^ Rodney Shakespeare (2007) The Modern Universal Paradigm.
  3. ^ Robert Ashford (1990) The Binary Economics of Louis Kelso: the Promise of Universal Capitalism (Rutgers Law Journal, vol. 22 No.1. Fall, 1990).
  4. ^ Robert Ashford & Rodney Shakespeare (1999) op. cit;
  5. ^ Time Magazine, June 29, 1970.
  6. ^ Louis Kelso & Patricia Hetter Kelso (1967) Two-Factor Theory: the Economics of Reality.
  7. ^ Rodney Shakespeare & Peter Challen (2002) Seven Steps to Justice.
  8. ^ Norman Kurland, Dawn Brohawn & Michael Greaney (2004)Capital Homesteading for Every Citizen: A Just Free Market Solution for Saving Social Security.
  9. ^ James S. Albus (1976) Peoples' Capitalism - The Economics of The Robot Revolution.
  10. ^ Sofyan Syafri Harahap (2005), Accounting Crisis. William Christensen Search for a Universal Paradigm: Making Justice Live For All International Conference on Universal Paradigm of Socio-Scientific Reasoning, Asian University of Bangladesh, 2005.
  11. ^ A notable lecture on this matter was given by Ing. B.J Habibie (former President, The Republic of Indonesia) at the international conference Islamic Economics and Banking in the 21st Century, Jakarta, Indonesia, November, 2005. The former President, a successful aircraft engineer, well understands the potential of technology to create wealth. See also Thoby Mutis (1995) Pendekatan Ekonomi Pengetahuan dalam Manajemen Kodedeterminass.
  12. ^ Rodney Shakespeare & Peter Challen (2002) Seven Steps to Justice.
  13. ^ Louis Kelso & Patricia Hetter Kelso (1986 & 1991) Democracy and Economics Power - Extending the ESOP Revolution through Binary Economics
  14. ^ William Greider (1997) One World, Ready or Not: The Manic Logic of Global Capitalism.
  15. ^ John Logue et al. (1998) Participatory Employee Ownership. C. Rosen & M Quarrey (1987 65 Harvard Bus. Rev.) How Well is Employee Ownership Working?
  16. ^ Robert A. Solo (1991) The Philosophy of Science and Economics
  17. ^ Rodney Shakespeare (2007) op. cit.
  18. ^ Michael Rowbotham (1998) The Grip of Death. James Gibb Stuart (1983) The Money Bomb.
  19. ^ Edward N. Wolff (1995) Top Heavy: A Study of Increasing Inequality in America and (1995) How The Pie Is Sliced: America's Growing Concentration of Wealth.
  20. ^ Roy Madron & John Jopling (2003) Gaian Democracies.
  21. ^ Norman Kurland (1998) The Federal Reserve Discount Window — www.cesj.org
  22. ^ John Tomlinson (1993) Honest Money. Joseph Huber & James Robertson Creating New Money. Peter Selby (1997) Grace and Mortgage.
  23. ^ Norman Kurland, Dawn Brohawn & Michael Greaney (2004) op. cit.
  24. ^ Rodney Shakespeare & Peter Challen (2002) op. cit.
  25. ^ John Medaille (2007) The Vocation of Business: Social Justice in the Marketplace.
  26. ^ Shann Turnbull (1975/2000) Democratising the Wealth of Nations and (2001) The Use of Central Banks to Spread Ownership. Jeff Gates (1999) The Ownership Solution and (2000) Democracy At Risk.
  27. ^ Norman Kurland (2001) Saving Social Security at www.cesj.org.
  28. ^ Abulhasan Sadeq Microfinance, Poverty Alleviation and Economic Development: Theory and Practice international conference on A Universal Paradigm of Socio-Scientific Reasoning at Asian University of Bangladesh, 2005.
  29. ^ Mark Douglas Reiners The Binary Alternative and the Future of Capitalism available at Center for Economic and Social Justice.
  30. ^ Robert Ashford Binary Economics − an overview (2006) http://ssrn.com/abstract=928752.
  31. ^ Robert Ashford Louis Kelso’s Binary Economy (The Journal of Socio-Economics, vol.25, 1996).
  32. ^ Louis Kelso Karl Marx: The Almost Capitalist (American Bar Association Journal, March, 1957).
  33. ^ Timothy D. Terrell Binary Economics: Paradigm Shift Or Cluster of Errors? Ludwig von Mises Institute.
  34. ^ Timothy P. Roth, (1996) A Supply-Sider’s (Sympathetic) View of Binary Economics, Journal of Socio-Economics 25 (1) pp. 58–59.

 

  

 

 

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                                        Friday April 18, 2009

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